General Insurance Dispute Information

Intent of a Contract’s Language Explored in Insurance Dispute

Published on: August 21, 2013 | By Berniard Law Firm

The method by which a contract’s ambiguous language is interpreted can decide who wins the case. A slight difference in statutory interpretation can acquit or convict a person charged with a serious felony or a petty misdemeanor. There are two main theories of interpretation: textualism and purposivism. Proponents of the textualism theory, or textualists, look to the precise language of the code, statute, contract, etc., in order to apply it to the facts. Pure textualists look solely to the four corners of the
document to aid them in interpretation.

Proponents of the purposivism theory, or purposivists, look to understand the legislative history and intent of the parties who drafted the language, to decide how to apply the law. Purposivists believe that this method of interpretation is the most effective way to ensure that the law is applied the way the lawmakers (legislative branch) would have wanted it. Usually, however, interpretation of language comes about through utilizing a combination of texualist and purposivist approaches.

In this case, the proper application of an insurance contract hinges on the language of the contract drafted by Safeway Insurance Company. Safeway issued a policy of automobile liability insurance to Lawrence E. Metz effective November 16, 2008, through May 16, 2009, which only listed his 2003 Chevrolet Avalanche as an insured vehicle. Although Metz paid in full for his policy covering auto insurance for his Avalanche, he attempted to add another vehicle, his 2008 Chevrolet Uplander, on the
same day he made his final payment for the Avalanche.

In response, Safeway sent a bill to Metz for the additional premium owed for coverage on the additional vehicle, which Metz denies ever receiving. After issuing a notice of cancellation to Metz when Safeway did not receive the additional premium, Safeway canceled Metz’s entire policy ten days after.

Just two days after Safeway had canceled Metz’s policy, Metz got into an accident in Bossier City, Louisiana, while driving his Avalanche. The question in this case: is Safeway responsible for covering Metz’s payments from the accident? Safeway argues that since Metz did not pay the additional premium for the Uplander, the entire policy was canceled, which meant Safeway was no longer Metz’s automobile insurance company. Metz argues that he had paid in full to have his Avalanche (the vehicle involved in the accident) covered, so Safeway should therefore cover the damages.

The Court of Appeals states that ambiguous policy provisions are generally construed against the insurer in favor of coverage. The court looks to a paragraph under the “CONDITIONS” portion of the Safeway policy to conclude that the terms of the policy apply separately to each of Metz’s vehicles. The policy states “when two or more automobiles are insured hereunder, the terms of the policy shall apply separately to each.” Therefore, the Court of Appeals held that the trial court was not manifestly erroneous in finding there was coverage on Metz’s Avalanche at the time of the accident.

There is, however, a dissent, arguing that when it comes to the paying of premiums, the terms of the Safeway policy does not apply separately to each vehicle. The dissenter argues that parsing of the premium coverage is “logically untenable.” His argument is further explored in the rehearing given to reconsider the majority opinion in this case, which is detailed in the next entry.

Experts a Valuable Resource in Hurricane Damage Insurance Litigation

Published on: August 19, 2013 | By Berniard Law Firm

Years after Hurricane Rita, which hit in September 2005, those who have had their homes damaged are still dealing with cleaning up the wreckage and rebuilding. Litigation involving insurance companies is still particularly prominent. One couple from Lake Charles, Louisiana knows about this type of litigation all too well.

The couple had homeowners insurance through State Farm and made a claim for damage to their home as result of the storm. State Farm paid them for the damages and they began to rebuild. However, after the claims were settled, the couple found that significant damage to the home’s rafters in the attic. An adjuster came right over and paid the couple for damage to three windows. The rafters, on the other hand, were a different question. There was a separation between the center beam and the rafters that connected to the center beam to support the roof; the center beam was essential to the strength and integrity of the home’s overall structure. State Farm explained that the couple needed to have the opinion of an engineer to support their claim for damage to the rafters.

In Louisiana, like many other states, lay people are generally not allowed to offer their opinions at trial. Instead, they are supposed to supply facts and the jury or judge is supposed to provide their opinion, resulting in the outcome of the trial. The witness should not substitute their opinion for that of the factfinder. However, if the witness is certified as an expert in a particular area, then they can give their opinion to the court.

Testimony of expert witnesses is particularly useful in highly technical trials. For example, if an individual is suing for a personal injury, it may be helpful to have a doctor come in to explain the injury and state how he or she thinks the plaintiff acquired the injury. If you can only acquire the injury a certain way, then the fact finder should know that information so they can provide an accurate final verdict.

In this case, the couple had their contractor come in to testify. Their contractor built the home and testified as to his opinion of how the damage occurred. He was a valuable witness because he could tell the judge that when he built the home, the center beam and rafters were not separated as they are now. He explained that if they were separated like that, then the house would not have been up to code and the couple could not have lived there.

The couple also employed an engineer to testify at the trial regarding the cause of the split in the rafters. The engineer looked at the house after the storm and, using his experience, explained that only extremely high winds could have created that kind of damage in the time between when the house was built and shortly after Hurricane Rita hit. He also stated that the home’s structure would have continued to get worse if the attic frame was not properly restored.

State Farm argued that the contractor was not an appropriate expert because he was not trained to be an expert regarding causation of the movement in the rafters. Because he was not an engineer, he could not compute the effect of the wind speed on the house nearly as well as an engineer could. However, State Farm did not like the engineer that the couple used either. In fact, they argued, the contractor did not even use the correct wind speed when he calculated the effect of the wind, so his testimony should be entirely discredited.

The court determined that both the contractor’s and the engineer’s testimony would remain in evidence. First, it concluded that the contractor was not retained as an expert for the trial, so he did not need to be qualified as an expert. Instead, he spoke about the before and after affects regarding the rafters. Louisiana law allows witnesses who are not experts to testify about their inferences and opinions if they are “rationally based upon the perception of the witness and helpful to a clear understanding of [the] testimony or determination of the fact at issue.” In addition, the court kept the engineer’s testimony because they determined that even though he had used the incorrect wind speed in his calculations, the correct wind speed would not have changed the outcome of his opinion.

Witnesses can make or break a case, and expert witnesses are particularly important to explain technical concepts that the average person may not understand. Those technical concepts are usually essential to the case.

Louisiana and Fifth Circuit Reaffirm the Necessity of Personal Jurisdiction

Published on: August 12, 2013 | By Berniard Law Firm

The “New York Convention” (9 U.S.C. §§ 201 et seq.) gives a U.S. court the ability to enforce a foreign arbitration award if there is personal jurisdiction over the defendant. Personal jurisdiction is when the defendant can expect to appear in a foreign country’s court because the defendant has minimum contacts with the country. First Inv. Corp. v. Fujian Mawei Shipbuilding, Ltd. reaffirms that personal jurisdiction is necessary when a plaintiff is trying to confirm an arbitration award.

In First Inv. Corp., a Marshall Islands corporation and Chinese shipbuilding company entered into a contract that had an arbitration clause. The Marshall Islands is a presidential republic of the United States. The U.S. provides defense, funding, social services, and its currency for use to the republic. The arbitration clause required all disputes to be resolved in neutral territory under the London Maritime Arbitrators Association rules. The English arbitration panel found for the Marshall Islands corporation, but China refused to enforce the award against the defendant because not all the arbitrators on the panel had seen the final draft of the decision. Instead of resolving the matter in either the country of arbitration or the defendant’s country, First Inv. Corp. commenced action in the U.S. District Court for the Eastern District of Louisiana. The case eventually appeared before the Fifth Circuit Court of Appeals.

The Fifth Circuit affirmed the district court’s decision that the U.S. lacks personal jurisdiction over a Chinese shipbuilding company that has no contacts with the U.S. The Chinese company did not distribute products, conduct any transactions, or maintain property on American soil. However, the Marshall Islands plaintiff argued that since the defendant did not have any contacts with the U.S., the defendant should not be afforded the right of due process stemming from personal jurisdiction. The Fourteenth Amendment of the U.S. Constitution forbids states from depriving “any person of life, liberty, or property, without due process.” In the district court trial, the plaintiff argued that as a corporation controlled by the Chinese government, the defendant was not entitled to due process. Ultimately, the trial court rejected the plaintiff’s argument because it would undermine the “minimum contacts” test set by the U.S. Supreme Court because a confirmation of the award would suggest that a court can exercise personal jurisdiction over a defendant with no contacts in the U.S. The Fifth Circuit followed up by citing cases affirming due process protection for foreign corporations.

The plaintiff then argued that a confirmation of the arbitration would not affect the defendant’s “substantive rights” or fundamental protections afforded by the U.S. Constitution. The Fifth Circuit disagreed because a confirmation of the arbitration award would allow the plaintiff to enforce the judgment in Britain.

First Inv. Corp. shows how significant it is for parties to understand U.S. legal procedures when seeking to enforce foreign arbitration awards.

Bar Fire Leads Court to Rule on Liability Under Lease Contract

Published on: August 11, 2013 | By Berniard Law Firm

In a suit by a commercial tenant and their insurance company against the landlord, Mr. Ducet, the landlord defended by arguing that the terms of the lease prevented the tenant from recovering damages. If the tenant was unable to recover damages the insurance company would also be unable to recover under the legal concept of subrogation.

The lease clause in question was called a mutual waiver. In it the parties agreed not to bring claims against each other for damages as a result of a fire if the damages were or could have been insured against under a typical fire insurance policy. The lease also stated that the landlord and the renter would each get a waiver of subrogation from their respective insurance underwriters. Subrogation is when an insurance company pays their policy holder the cost to repair or replace the damaged property but then sues the person who caused the damage or is otherwise legally responsible for it to get the money back from them. The Court found that the waiver in the lease prevented the tenant’s insurance company from suing the landlord for the amount the company had paid the tenant for damaged personal property and equipment. The Court stated that the insurance company, as subrogee, had no greater rights than the tenant. Under the mutual waiver provision in the lease agreement the tenant had no right to sue the landlord for the cost of personal property or equipment lost in a fire, therefore the insurance company could have no right to sue either.

Another issue in the case was how the mutual waiver affected other responsibilities under the contract. The tenant arranged to have the roof repaired after the fire even though under the terms of the lease the landlord was responsible for repairing any damage done to the building itself as a result of a fire. The Court found that the landlord had a duty under the contract to keep the building itself in good repair and that it was his responsibility to repair the roof after the fire. The fact that the tenant hired someone to fix the roof before the landlord had done it did not relieve the landlord of his obligation. The mutual waiver clause in the lease did not prevent the repair company from suing the landlord for the cost of the repairs which were the landlord’s responsibility.

This case shows how previous contracts, such as a lease, can affect later contracts, like fire insurance policies, even when they are made with third parties. It is important for every property owner and renter to understand how their contracts affect their rights and obligations in regard to their property. This is equally important for business owners as for people dealing with their own homes.

Dispute With Former Attorney Provides Example of Appeal Process

Published on: August 5, 2013 | By Berniard Law Firm

Disputes involving attorneys can be inherently complicated and require a significant amount of legal wrangling to settle. The issue at hand in this post comes from a case heard in the Court of Appeal for the Fourth Circuit of Louisiana. The plaintiffs, Jill and Claud Brown, brought a case against their attorney Mr. Lehman. Mr. Lehman represented the Browns in a case to recover damages suffered from Hurricane Katrina but subsequently withdrew from the case with the court’s permission on July 23, 2009.

In the spring of the next year Mr. Lehman filed a “motion to set fees” requesting the Browns to pay him legal fees. Although the lower court granted Mr. Lehman a large percentage of the settlement received by the Browns amounting to $12,300, the Court of Appeals reversed that decision because Mr. Lehman had withdrawn from the case and failed to first file a motion to intervene (a fact the trial court was not aware was necessary) before he filed the motion to set fees. The motion to intervene in the action was deemed to be necessary by the appeals court and that was the reason for the reversal.

The above case displays the importance of detail within the law. The trial court made a judgment on an intervening rule that was then overturned on appeal, creating a situation very detrimental financially to the Browns and anyone in the same situation. Every law student takes a course in civil procedure in their first year of law school and many find it to be unexciting and drawn out. This case, however, shows its practical importance in the legal world in which we reside. The Browns situation is one that anyone can easily finds themselves especially considering the difficulty for most people to navigate the language of the law in Louisiana.

Driver Liability Varies When Car Accident Occurs

Published on: July 26, 2013 | By Berniard Law Firm

As is often the case, an accident between two vehicles can subsequently involve further vehicles not initially involved in the initial rear-ending accident. The driver of the subsequent vehicle which becomes involved in an accident after the initial crash may be unsure whether they are for damages caused by their own involvement or are able to make a claim for their own damages suffered. The possibility of being responsible or owed for damages in a multiple vehicle accident almost always depends on the circumstances surrounding the driver of the following car involved in the collision after the initial accident.

It is generally presumed under the law the vehicle following other vehicles involved in an accident will be at fault for the resulting accident when it collides with the initial collided vehicles. However, a driver can avoid this presumption of liability if it is shown they were following at a safe distance under the circumstances, their vehicle was under control, and they were closely observing the vehicle ahead of them. There is an additional method of proving no fault for liability referred to as the sudden emergency doctrine. A following driver may be absolved of liability under the sudden emergency doctrine if it is demonstrated the lead driver negligently created a hazard which could not reasonably be avoided. A court is going to look at the circumstances from which the emergency arose and determine whether the person in the position of imminent peril had sufficient time to consider and weigh all circumstances or the best means to adopt to avoid the impending danger of the emergency.

A recent case before the Second Circuit Court of Appeal of Louisiana, King v. State Farm Insurance Co., succinctly demonstrates the applicability of the sudden emergency doctrine in absolving the following driver from complete liability while awarding the following driver damages for injuries incurred. In this case, Ms. King was following a vehicle which struck another vehicle from the rear. Ms. King then swerved onto the shoulder to avoid the accident. Unfortunately, at the same time Ms. King swerved, the vehicle in front of her bounced to the side of the collision directly into Ms. King’s path on the shoulder where she impacted it. The court looked favorably upon the facts that Ms. King had been traveling beneath the speed limit, was observing the car in front of her, and was at a relatively reasonable behind the lead car. The court found that in addition to this the lead driver had created the emergency situation through his own collision, and Mrs. King had taken reasonable precautions by braking, and steering away from the accident. Despite her precautions, the unexpected turning of the vehicle into her emergency path was something she could not have sufficiently avoided in time. Hence, the court found the lead driver had created a hazard resulting in a Ms. King facing a sudden emergency. The court found the lead driver 100% at fault for the damages and injuries Ms. King suffered as a result of the lead driver’s original collision.

In a case involving liability of parties, the court must assess the relative fault of each of the parties. A following driver will not be responsible for liability under the sudden emergency doctrine, unless their actions caused the emergency. In the example case above, the lead driver was found to have created the emergency, and thus Ms. King was at no fault in the subsequent collision. The Court of Appeal of Louisiana held that the trial court had correctly awarded Ms. King for the damages and injuries she had suffered as a result of the accident.

If you believe you have a claim arising from a multiple vehicle accident, contact the Berniard Law Firm. Providing the best experts in liability and assessing accident claims, our law firm is fully capable of meeting your litigation needs.

Permission Involving Use of Government Vehicle Crucial to Lawsuit

Published on: July 22, 2013 | By Berniard Law Firm

In this auto-related blog post, plaintiff Fartima Hawkins seeks to recover damages resulting from a February 5, 2008, automobile accident in Baton Rouge Louisiana. The accident occurred when Ms. Hawkins’ vehicle was broadsided by a government vehicle being driven by Sergeant Sean Fowler, a recruiter for the United States Army. Ms. Hawkins filed suit naming, among others, Sergeant Fowler and his personal liability insurer, Allstate, as defendants

After Hawkins filed suit against them, Allstate filed a motion for summary judgment, alleging that the policy issued to Fowler excluded coverage for the accident. Allstate claimed Fowler lacked permission to use the government vehicle for commuting purposes or, alternatively, because Fowler used the vehicle for his regular use insofar as he drove it back and forth from his home in Baton Rouge to his office in Covington each day. Allstate further asserted that its policy did not afford coverage under either circumstance and summary judgment was therefore appropriate.

The trial granted Allstate summary judgment reasoning that whether Mr. Fowler had implied permission or not, it either falls within the regular use exclusion because back and forth to work every day is regular use or alternatively falls within the lack of permission exclusion. Plaintiff subsequently filed a Motion for New Trial and/or Reconsideration which was denied by the trial court.

Vicarious Liability Explored in Jones Act Case

Published on: July 9, 2013 | By Berniard Law Firm

What is vicarious liability? Vicarious liability, simply put, is the common law principle that an employer may be liable for its employee’s negligence if that employee’s negligence occurred within the course or scope of his or her employment.

In the Beech v. Hercules Drilling Company, L.L.C., case coming out of the Eastern District of Louisiana, vicarious liability principles came into play. In this case, certain bizarre events led the United States Court of Appeals for the Fifth Circuit to make a ruling as to whether Hercules Drilling Company should be held vicariously liable for the actions of Michael Cosenza, its employee, who accidentally shot and killed his co-worker, Keith Beech, while both were aboard a Hercules owned vessel.

The facts of the case were not in dispute. Beech was a crane operator aboard a jack-up drilling rig that Hercules owned, while Cosenza was a driller aboard the vessel. On December 13, 2009, the fateful events that led to the aforementioned case, took place. Cosenza happened to own a firearm, which he accidentally took aboard the vessel; Hercules policy prohibited any firearms from being aboard their vessels. Not only did Cosenza bring a firearm aboard the vessel, violating the policy, but when he realized that he had inadvertently brought it aboard (he found it among his laundry) he did not inform anyone about it and placed it in his locker, further violating Hercules policy. Cosenza was aware of the policies regarding firearms.

Plain Language of the Insurance Policy Trumps Follow Form Rules

Published on: June 30, 2013 | By Berniard Law Firm

“An insurance policy is a contract between the parties and should be construed using the general rules of interpretation of contracts set forth in Civil Code.” As such, the courts generally try to confine their analysis of an insurance agreement to the language within the contract. They try to determine the common intent of the parties when they entered the contract, and do not want to make the contract any more inclusive than it was intended to be. That is exactly what happened with a New Orleans School Board sued under an insurance contract regarding flood insurance.

The School Board argued that two of their insurance carriers had flood coverage because they were “follow form” policies. That is, they “followed” the form of another insurance carrier, the primary insurance company, which the school also used. Follow form policies are designed to be very similar to the primary insurance company, but cover large loss amounts that the primary insurance company may not cover. For example, if the first insurance company covers only $100 of loss, then the secondary, or excess, insurance company may cover the an additional $50 of the same type of loss. Generally, they cover the same things, but the amounts may be larger or specifically state that they will cover above a certain amount that the primary insurance company covers.

It is not uncommon for large structures to have several insurance companies. The School Board in this case actually had five insurance policies that built upon one another and covered various hazards. The school had already settled their complaints with their other three insurance companies. The major concern in this case, however, was flood damage relating to Hurricane Katrina. Even in mid-2012, individuals and insurance companies were still dealing with the complications that Katrina created.

In this case, the policy that the excess insurance companies followed had some flood coverage, specifically for electronic media, so the school argued that these other carriers also offered flood coverage. In addition, the policy also had a coverage for “fungus, wet rot, dry rot, and bacteria” that may imply partial coverage for flood insurance.

However, the two other insurance carriers’ polices specifically stated that they did not offer any flood coverage. Therefore, although some of the language in the contract may have appeared to offer some coverage, the contract negated that appearance by specifically stating that no flood insurance was provided. An excess carrier is allowed to include extra exclusions that do not completely follow from the primary insurer.

The court concluded that where the insurance company specifically stated that it did not cover flood, the court would not create that inclusion: “We decline to create flood coverage out of an exclusion to an exception.” The court notes that although the “fungus” provision may look like it covers flood slightly, it also specifically states that the fungus, wet rot, dry rot, and bacteria can only be a result of hazards that are covered in the insurance policy, namely, not flood.

The plain language of the contract won in this case, which gave the school less coverage than they may have anticipated. It is important to read through your insurance contracts so that you are aware what they do and do not cover.

Summary Judgment Granted in Uninsured Motorist Dispute

Published on: June 26, 2013 | By Berniard Law Firm

Vehicle collisions are difficult in of themselves but when they involve an insurance dispute, they can be considerably daunting. One recent case involving an accident in dispute helps illustrate this further. In this case, Broussard and Brandy Oppenheimer live together with a child, but are unmarried. Broussard was driving Oppenheimer’s vehicle when he was rear-ended by an uninsured driver. While the pair maintained unisured motorist coverage through their insurance policies, which is suppose to cover them in these types of situations. However, the insurance company saw otherwise.

Farm Bureau denied Broussard’s request, stating that “the policy did not cover the accident in that Broussard was operating a vehicle that was not listed in the policy.” The insurer filed a motion of summary judgment on the issue of coverage, while Broussard filed a cross motion summary judgment to recover under his policy. The Appellate court cited Schroeder v. Board of Supervisors of Louisiana State University to define summary judgment, which states that a motion for summary judgment should be granted “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to material fact, and that mover is entitled to judgment as a matter of law.”

The trial court reasoned that by allowing Farm Bureau “to exclude coverage would allow…a policy in derogation of La.R.S. 22:1295.” The statute explains that the policy should provide coverage to “an injured party while occupying and automobile not owned by said injured party.” Farm Bureau appealed the trial court’s decision to grant Michael Broussard’s motion for summary judgment. The granted motion for summary judgment declared Broussard was entitled to coverage under his uninsured motorist clause in his insurance policy.

To counter, Farm Bureau cited policy language claiming the insuring policy does not apply:

This insuring policy does not apply: (1) to any automobile owned by or furnished for the regular use to either the named insured or a member of the same household.

And;

This policy does not apply: (g) Under division 1 of coverage to bodily injury to the insured, his spouse or members of household sustained while in or entering into or alighting from an automobile owned by the insured, his spouse, or members of the household except the one described in the declarations.

The trial court and the Appellate court both agreed and affirmed that “policy language cannot change the requirements of the statute.” The law would allow the exclusion of coverage if involving a spouse or relative’s policies, but is not the situation here as Broussard and Oppenheimer are not married or related. Farm Bureau’s attempt to push the limits of its restrictions were unsuccessful, however, resulting in the judgment in favor of Broussard.